The ILA Checklist for Lenders and Borrowers

At a Glance

Referring to an ILA checklist for lending and borrowing can help safeguard rights, improve compliance and

minimise risks. This can be especially useful in transactions where significant financial risks or exposures

require careful consideration. 

iLA provides professional, unbiased ILA for lending and borrowing decisions, including property and finance

arrangements that involve personal guarantees, equity release, bridging loans and more.

To book a consultation, get in touch today.

Key Risks and Considerations in Lending and Borrowing Transactions

Lending or borrowing transactions carry inherent risks and uncertainties, especially when complex financial

transactions or property arrangements are involved. If you’re wondering how to minimise risks and ensure

compliance in the UK’s tightly regulated environment, you may benefit from ILA for lending and borrowing. 

ILA protects your rights and interests, whether you’re a lender or a borrower, and allows you the opportunity

to understand the nuances of complex agreements. It not only fulfils your obligations to carry out lender or

borrower due diligence, but also safeguards you against claims of undue influence, future disputes or

misrepresentation.

Whether it's clarifying legal jargon around personal guarantees, ensuring informed consent, or addressing the

nuances of complex transfer or equity arrangements, ILA for lending and borrowing provides documentary proof that you’ve understood your rights,

obligations and liabilities.

In this article, we explore the importance of ILA for lending and borrowing decisions and how an

ILA checklist can help ensure compliance. 

What Is an ILA Checklist and Why Does It Matter for Lenders and

Borrowers

The landmark case of Royal Bank of Scotland v Etridge (No 2) [2001] established that ILA for lending and borrowing, including independent legal advice for guarantors, wasn’t just

a formality but an important safeguard for both parties. Here, the House of Lords required banks to ensure that

borrowers received independent legal advice, especially in cases where a loan would benefit only one person.

This also includes situations where personal assets are used as security for someone else, where risks of undue

influence or misunderstandings are significantly higher. An ILA checklist listing out requirements and verification

steps can serve as a protective barrier for borrowers while being a shield against future legal disputes for a lender.

ILA also plays an instrumental role in building trust between lenders and borrowers by ensuring all parties are entering the agreement of their own free will and are aware of their rights and

liabilities. 

ILA Checklist Requirements for Lenders

Many UK lenders use specific checklists detailing their key requirements to ensure that borrowers receive

impartial, independent legal advice. This allows lenders to confirm that borrowers have understood their

obligations and liabilities around financial and legal arrangements. It's particularly helpful when

signing contracts for buying commercial property, secured loan agreements or transactions where there’s a high risk of financial exposure or undue influence.

An ILA checklist for lenders typically includes:

• Verification of the mental capacity of a borrower, where relevant

• Conflict-free counsel, where a solicitor providing ILA to a borrower cannot be from the same firm

  representing the lender.

• An Etridge letter template or a specific adviser’s certificate provided by the lender should be signed

  by the solicitor providing ILA to the borrower.

• An ILA solicitor should meet the borrower privately to give independent legal advice,

  either in person or via digital medium, depending on the lender's requirement.

ILA Checklist Requirements for Borrowers

Solicitors providing professional ILA for borrowers also refer to a similar checklist, with the focus being on

discharging their duty of care. It ensures that the advice you receive meets the requirements of borrower due

diligence and acknowledges that you’ve understood your rights, risks and obligations clearly.

These are some of the key requirements you’ll find on an ILA checklist for borrowers:

• A clause-by-clause explanation of the legal document detailing your risks, potential worst-case scenarios

  and probable outcomes for breach of agreements.

• You can expect your ILA solicitor to give you an explanation of possible choices you may have, in case

  you’re reluctant to go ahead with the agreement or want out.

• A general explanation of the key terms and obligations contained within the agreement, ensuring you

  understand the nature of the commitment you are entering into.

• A client care letter or ILA certificate will then be signed by you, acknowledging you’ve

  received independent legal advice.

Key Documents Needed to Meet ILA Lending Standards

At award-winning independent legal advice service providers like iLA, the ILA process is designed to provide borrowers with clarity, transparency and confidence before signing important agreements.

However, to ensure a successful session of ILA for lending and borrowing, you’ll need to provide key documents.

This includes:

• Identity proof, with the name matching property or finance documents

• Residency proof, like utility bills or bank statements, not older than 3 months

• The main agreement document (unsigned loan agreement, mortgage document, etc.)

• Lender instructions or requirements (eg, solicitor’s requirement letter)

For Expert-Led, Compliant ILA for Lenders and Borrowers, Choose iLA

Considering ILA lending and borrowing decisions? Speak to our expert solicitors for compliant advice and

minimise risks, while protecting your interests.

At iLA, we provide swift, tailored advice, backed by expertise and experience. We offer expertise in property and

finance areas, including specialist advice for lending and borrowing. 

From development finance and personal guarantees to equity release and transfer of equity, we’ve got you covered. We offer you a fully digitalised process,

making our ILA convenient and accessible. 

You can easily book an appointment with us and arrange for an online video call consultation from the comfort

of your office or home. We offer a no-fuss, fully transparent pricing model based on your urgency, which is disclosed to you upfront.

Ready to receive clarity and protect yourself from unexpected liability? Call us today.  

The information in this blog is general in nature. It is not intended as legal or financial advice.

You should always obtain professional advice before making decisions based on your own circumstances.